Active Bond

DEFINITION of 'Active Bond'

A bond or other fixed-income security that is frequently traded on the New York Stock Exchange. Active bond orders are typically filled quickly due to the presence of higher demand from investors and generally have lower bid-ask spreads.

BREAKING DOWN 'Active Bond'

Active bonds are traded by active bond crowds, which are traders that buy and sell bonds that are frequently traded. This is different than bonds infrequently traded, which are traded by the inactive bond crowd. Because of the higher liquidity of active bonds, active bond traders are better able to dictate prices.

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RELATED FAQS
  1. What determines the price of a bond in the open market?

    Learn more about some of the factors that influence the valuation of bonds on the open market, and why bond prices and yields ... Read Answer >>
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    Discover how bonds are traded as investment securities and understand the various terms used in bond trading, including par ... Read Answer >>
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  4. Which factors most influence fixed income securities?

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  5. Why is my bond worth less than face value?

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  6. Do long-term bonds have a greater interest rate risk than short-term bonds?

    The answer to this question lies in the fixed income nature of bonds and debentures, often referred to together simply as ... Read Answer >>
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